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http://baptistnews.com/culture/social-issues/item/29523-court-upholds-clergy-housing-allowanceA federal appeals court in Chicago struck down a challenge to a tax benefit for “ministers of the gospel,” finding that the atheist couple behind it has no legal standing to sue.

By Bob Allen

Clergy can keep their tax-free housing allowance for now, because a group challenging its constitutionality lacks legal standing to sue, a federal appeals court ruled Nov. 13.

The Chicago-based 7th U.S. Circuit Court of Appeals said the leaders of the Freedom From Religion Foundation cannot be parties in a lawsuit challenging a law that causes them no harm.

Lacking a “concrete and particularized” injury suffered “in fact,” the three-judge panel determined, the group’s complaint about an IRS rule allowing clergy to avoid paying taxes on a part of their income designated as a housing allowance is no more than a “generalized grievance” about a law they don’t particularly like.

The court struck down a November 2103 decision by U.S. District Judge Barbara Crabb finding that granting a benefit for “ministers of the gospel” not available to everyone else favors religion over non-religion, thus creating an establishment of religion prohibited by the First Amendment of the U.S. Constitution.

Because the plaintiffs’ did not have standing, the appellate judges said they lacked jurisdiction to consider the legality of a federal law passed in 1954 which exempts clergy from paying taxes on the amount of their income used to purchase or rent a home, including furnishings and utilities.

Don Byrd, who monitors church-state issue on the Baptist Joint Committee for Religious Liberty blog, observed that the question of whether the parsonage exemption does in fact unconstitutionally discriminate on the basis of religion “will have to wait for another day, a different case.”

Numerous religious groups filed legal briefs in the case seeking to preserve the benefit. O.S. Hawkins, president of GuideStone Financial Resources, part of a coalition of denominational pension boards which filed an amicus brief in the case, called the ruling “good news for ministers.”

“Throughout the decades, there has been a recognition that the minister’s housing allowance is a vital benefit that is consistent with our Constitution,” said Hawkins, head of the Southern Baptist Convention agency tasked with offering retirement, insurance, investment management and property and casualty coverage for ministers, church workers and denominational employees. “We are thankful for the government’s defense of the housing allowance against this case and thankful to the appeals court for its decision in this matter.”

Dan Barker and Annie Laurie Gaylor, husband-and-wife co-presidents of the Madison, Wis.,-based Freedom From Religion Foundation, expressed disappointment at the court’s unwillingness to confront what they called a "blatant preference for ministers and churches.”

"This privilege which religion and its leaders demand is discriminatory, and clearly signals governmental preference and subsidy for the promulgation of religion over non-religion," said Gaylor, who founded the Freedom From Religion Foundation in a meeting around her mother’s dining room table in 1978 and worked from there to make the FFRF the largest organization of atheists, agnostics and “free-thinkers” in the United States.

Barker, a former minister and evangelist who left Christianity to become an atheist in 1984, promised to “continue to challenge this indefensible favoritism for religion in other forums until the issue cannot be circumvented.”

]]>A federal appeals court in Chicago struck down a challenge to a tax benefit for “ministers of the gospel,” finding that the atheist couple behind it has no legal standing to sue.

By Bob Allen

Clergy can keep their tax-free housing allowance for now, because a group challenging its constitutionality lacks legal standing to sue, a federal appeals court ruled Nov. 13.

The Chicago-based 7th U.S. Circuit Court of Appeals said the leaders of the Freedom From Religion Foundation cannot be parties in a lawsuit challenging a law that causes them no harm.

Lacking a “concrete and particularized” injury suffered “in fact,” the three-judge panel determined, the group’s complaint about an IRS rule allowing clergy to avoid paying taxes on a part of their income designated as a housing allowance is no more than a “generalized grievance” about a law they don’t particularly like.

The court struck down a November 2103 decision by U.S. District Judge Barbara Crabb finding that granting a benefit for “ministers of the gospel” not available to everyone else favors religion over non-religion, thus creating an establishment of religion prohibited by the First Amendment of the U.S. Constitution.

Because the plaintiffs’ did not have standing, the appellate judges said they lacked jurisdiction to consider the legality of a federal law passed in 1954 which exempts clergy from paying taxes on the amount of their income used to purchase or rent a home, including furnishings and utilities.

Don Byrd, who monitors church-state issue on the Baptist Joint Committee for Religious Liberty blog, observed that the question of whether the parsonage exemption does in fact unconstitutionally discriminate on the basis of religion “will have to wait for another day, a different case.”

Numerous religious groups filed legal briefs in the case seeking to preserve the benefit. O.S. Hawkins, president of GuideStone Financial Resources, part of a coalition of denominational pension boards which filed an amicus brief in the case, called the ruling “good news for ministers.”

“Throughout the decades, there has been a recognition that the minister’s housing allowance is a vital benefit that is consistent with our Constitution,” said Hawkins, head of the Southern Baptist Convention agency tasked with offering retirement, insurance, investment management and property and casualty coverage for ministers, church workers and denominational employees. “We are thankful for the government’s defense of the housing allowance against this case and thankful to the appeals court for its decision in this matter.”

Dan Barker and Annie Laurie Gaylor, husband-and-wife co-presidents of the Madison, Wis.,-based Freedom From Religion Foundation, expressed disappointment at the court’s unwillingness to confront what they called a "blatant preference for ministers and churches.”

"This privilege which religion and its leaders demand is discriminatory, and clearly signals governmental preference and subsidy for the promulgation of religion over non-religion," said Gaylor, who founded the Freedom From Religion Foundation in a meeting around her mother’s dining room table in 1978 and worked from there to make the FFRF the largest organization of atheists, agnostics and “free-thinkers” in the United States.

Barker, a former minister and evangelist who left Christianity to become an atheist in 1984, promised to “continue to challenge this indefensible favoritism for religion in other forums until the issue cannot be circumvented.”

The fate of a 60-year-old provision that allows churches to provide ministers with a tax-exempt “parsonage allowance” now lies in the hands of the 7th U.S. Circuit Court of Appeals.

The Chicago-based appellate court heard oral arguments Sept. 9 in a lawsuit filed by the Freedom From Religion Foundation claiming the IRS “confers a significant tax benefit upon religious clergy that is not available to non-clergy taxpayers.”

The Madison, Wis.,-based group that advocates for “freethinkers” including atheists, agnostics and skeptics claims the exemption is “patently unfair” and a violation of the constitutionally mandated separation of church and state.

A legal brief filed in June noted that even the Bible commands citizens to “render unto Caesar the things that are Caesar’s.”

In November 2013 a federal judge agreed, ruling that a section of the tax code granting a benefit for “ministers of the gospel” not available to everyone else favors religion over non-religion, thus creating an establishment of religion prohibited by the First Amendment of the U.S. Constitution.

Convenience of the employer is based on the premise that for something to qualify as income, there must be an economic gain that primarily benefits the taxpayer personally. Employees might enjoy things like meals, travel and office furnishings, for example, but if they are provided primarily to benefit their employer, they are not counted as taxable income.

The same principle applies to lodging. For jobs like hotel managers required to live on-site, government workers serving abroad or seamen who live aboard ships, lodging is a key component of their work.

An April friend-of-the-court brief by the Becket Fund for Religious Liberty argued that ministers are typically expected to live near the church they serve, and in smaller congregations they often function as the building’s primary caretaker.

Ministers are on call day and night and frequently expected to open their homes to church events, meetings with parishioners and out-of-town guests like visiting missionaries. Further, the brief stated, ministers often face frequent moves and limited choice, especially if they are poorly paid.

The IRS identifies a minister qualifying for the housing allowance as someone “duly ordained, commissioned or licensed by a religious body” with authority to “conduct religious worship, perform sacerdotal functions and administer ordinances or sacraments according to the prescribed tenets and practices of that church or denomination.”

The Freedom From Religion Foundation argued that singling out clergy for preferential tax benefits violates the Establishment Clause. “Neutrality is a necessary requirement of the Establishment Clause, which means that tax benefits cannot be preferentially provided to support religion,” according to the brief. It further contended that the main motivation for keeping the allowance is financial self-interest.

“Questioning tax-free housing for ministers is controversial because it is valuable to clergy and churches,” the group argued. “From the perspective of financial self-interest, ministers and churches are understandably concerned, as the multiple amicus briefs attest, but not because of interference with religious beliefs.”

According to a Courthouse News Servicereport, much of the discussion at Tuesday’s hearing focused on standing. The plaintiffs aren’t asking for a tax exemption themselves, notes a case background page on the Becket Fund website. “Instead, they merely seek to eliminate the exemption for everyone else.”

The other decision the court must weigh is whether the benefit is constitutional. The Becket Fund brief maintained the tax code routinely provides special treatment to churches not to promote religion but to reduce entanglement between church and state.

Churches are exempt from Social Security and Medicare taxes for wages paid to ministers, for example. Instead, ministers are treated as self-employed. Churches and certain related entities do not have to file IRS Form 990, a statement of financial disclosure required of other nonprofits.

The Becket Fund claimed removing the parsonage allowance would increase church-state entanglement by putting the IRS in the position of determining which deductions claimed as business expenses qualify as ministry.

The brief also maintained the housing allowance reduces discrimination among religions by favoring groups like the Roman Catholic Church, which uses primarily church-owned parsonages, over other churches, where it makes more sense to reimburse the minister for living expenses than to purchase and maintain a parsonage.

]]>The 7th U.S. Circuit Court of Appeals heard oral arguments Tuesday in a case about whether an IRS provision that allows churches to provide their ministers with a tax-free housing allowance instead of providing a parsonage violates the Constitution.

By Bob Allen

The fate of a 60-year-old provision that allows churches to provide ministers with a tax-exempt “parsonage allowance” now lies in the hands of the 7th U.S. Circuit Court of Appeals.

The Chicago-based appellate court heard oral arguments Sept. 9 in a lawsuit filed by the Freedom From Religion Foundation claiming the IRS “confers a significant tax benefit upon religious clergy that is not available to non-clergy taxpayers.”

The Madison, Wis.,-based group that advocates for “freethinkers” including atheists, agnostics and skeptics claims the exemption is “patently unfair” and a violation of the constitutionally mandated separation of church and state.

A legal brief filed in June noted that even the Bible commands citizens to “render unto Caesar the things that are Caesar’s.”

In November 2013 a federal judge agreed, ruling that a section of the tax code granting a benefit for “ministers of the gospel” not available to everyone else favors religion over non-religion, thus creating an establishment of religion prohibited by the First Amendment of the U.S. Constitution.

Convenience of the employer is based on the premise that for something to qualify as income, there must be an economic gain that primarily benefits the taxpayer personally. Employees might enjoy things like meals, travel and office furnishings, for example, but if they are provided primarily to benefit their employer, they are not counted as taxable income.

The same principle applies to lodging. For jobs like hotel managers required to live on-site, government workers serving abroad or seamen who live aboard ships, lodging is a key component of their work.

An April friend-of-the-court brief by the Becket Fund for Religious Liberty argued that ministers are typically expected to live near the church they serve, and in smaller congregations they often function as the building’s primary caretaker.

Ministers are on call day and night and frequently expected to open their homes to church events, meetings with parishioners and out-of-town guests like visiting missionaries. Further, the brief stated, ministers often face frequent moves and limited choice, especially if they are poorly paid.

The IRS identifies a minister qualifying for the housing allowance as someone “duly ordained, commissioned or licensed by a religious body” with authority to “conduct religious worship, perform sacerdotal functions and administer ordinances or sacraments according to the prescribed tenets and practices of that church or denomination.”

The Freedom From Religion Foundation argued that singling out clergy for preferential tax benefits violates the Establishment Clause. “Neutrality is a necessary requirement of the Establishment Clause, which means that tax benefits cannot be preferentially provided to support religion,” according to the brief. It further contended that the main motivation for keeping the allowance is financial self-interest.

“Questioning tax-free housing for ministers is controversial because it is valuable to clergy and churches,” the group argued. “From the perspective of financial self-interest, ministers and churches are understandably concerned, as the multiple amicus briefs attest, but not because of interference with religious beliefs.”

According to a Courthouse News Servicereport, much of the discussion at Tuesday’s hearing focused on standing. The plaintiffs aren’t asking for a tax exemption themselves, notes a case background page on the Becket Fund website. “Instead, they merely seek to eliminate the exemption for everyone else.”

The other decision the court must weigh is whether the benefit is constitutional. The Becket Fund brief maintained the tax code routinely provides special treatment to churches not to promote religion but to reduce entanglement between church and state.

Churches are exempt from Social Security and Medicare taxes for wages paid to ministers, for example. Instead, ministers are treated as self-employed. Churches and certain related entities do not have to file IRS Form 990, a statement of financial disclosure required of other nonprofits.

The Becket Fund claimed removing the parsonage allowance would increase church-state entanglement by putting the IRS in the position of determining which deductions claimed as business expenses qualify as ministry.

The brief also maintained the housing allowance reduces discrimination among religions by favoring groups like the Roman Catholic Church, which uses primarily church-owned parsonages, over other churches, where it makes more sense to reimburse the minister for living expenses than to purchase and maintain a parsonage.

American Baptist Churches USA joined other faith groups in a friend-of-the-court brief filed last month urging the 7th U.S. Circuit Court of Appeals to uphold the ministerial housing allowance as a constitutional accommodation of religion.

The brief filed by the Church Alliance, a coalition of the chief executive officers of more than 30 denominational benefit programs, said a federal judge erred in a November ruling that an IRS provision allowing clergy to avoid paying taxes on part of their income designated as a housing allowance violates the constitutionally mandated separation of church and state.

The religious leaders challenged Judge Barbara Crabb’s underlying assumption that any benefit to a religious organization must also be offered to secular organizations. While the U.S. Constitution does not allow government to subsidize religion, they said, nothing prohibits things like tax exemption, which honors the separation of church and state by choosing to leave religion alone.

For a number of historical reasons, they said, some churches — especially older and more hierarchical ones — tend to own parsonages and rectories while many newer or less-established churches do not. Because of that, they said, the tax law has a secular purpose of ensuring that clergy of all religious traditions are treated equally.

Other Baptist groups endorsing the brief included Converge Worldwide, formerly the Baptist General Conference, and the Board of Retirement and Insurance of the National Association of Free Will Baptists.

]]>While the government cannot subsidize religion, nothing prohibits the state from choosing to leave the church alone, claims a brief backed by faith groups.

By Bob Allen

American Baptist Churches USA joined other faith groups in a friend-of-the-court brief filed last month urging the 7th U.S. Circuit Court of Appeals to uphold the ministerial housing allowance as a constitutional accommodation of religion.

The brief filed by the Church Alliance, a coalition of the chief executive officers of more than 30 denominational benefit programs, said a federal judge erred in a November ruling that an IRS provision allowing clergy to avoid paying taxes on part of their income designated as a housing allowance violates the constitutionally mandated separation of church and state.

The religious leaders challenged Judge Barbara Crabb’s underlying assumption that any benefit to a religious organization must also be offered to secular organizations. While the U.S. Constitution does not allow government to subsidize religion, they said, nothing prohibits things like tax exemption, which honors the separation of church and state by choosing to leave religion alone.

For a number of historical reasons, they said, some churches — especially older and more hierarchical ones — tend to own parsonages and rectories while many newer or less-established churches do not. Because of that, they said, the tax law has a secular purpose of ensuring that clergy of all religious traditions are treated equally.

Other Baptist groups endorsing the brief included Converge Worldwide, formerly the Baptist General Conference, and the Board of Retirement and Insurance of the National Association of Free Will Baptists.

Christians, Jews, Muslims and Hindus may have different ideas about God, but they all agree on a tax break for clergy under attack by an atheist group that says it discriminates against the non-religious.

Interests diverse as conservative evangelicals, mainline Protestants and one group broad enough to embrace both the Southern Baptist Convention and The International Society for Krishna Consciousness filed legal briefs in recent days asking an appeals court to reverse a lower-court decision last year ending a 60-year-old “parsonage allowance” that allows churches to provide ministers with tax-exempt housing allowances in lieu of housing them in parsonages on church property.

The Becket Fund for Religious Liberty filed a brief April 8 representing Muslim, Eastern Orthodox and Hindu religious groups — as well as the SBC’s Ethics and Religious Liberty Commission and International Mission Board.

The brief says the groups disagree “profoundly on matters of theology, but are united by their deep concerns” about the “direct, immediate and harmful financial effect” on faith groups that rely on the parsonage allowance to provide housing to their ministers.

The Church Alliance, a coalition of the chief executive officers of more than 30 denominational benefit programs, weighed in April 9 with a brief arguing that the tax break passes constitutional muster because it has a secular purpose and its primary effect is neither to advance nor inhibit religion.

“The United States Supreme Court has long distinguished between affirmative assistance to religious organizations and merely lifting government‐imposed burdens so as to allow those organizations to exercise their religious mission more freely,” claimed groups including the American Baptist Churches in the U.S.A., Board of Retirement and Insurance of the National Association of Free Will Baptists and Converge Worldwide, formerly the Baptist General Conference.

“When Congress chooses not to impose a burden on religious organizations — whether by means of tax exemption or regulatory exception — it honors, rather than transgresses, this nation’s long tradition of separation between church and state.”

Alliance Defending Freedom, founded in 1994 by conservative evangelicals including James Dobson, D. James Kennedy and Bill Bright, represents 624 pastors and churches from denominational backgrounds including Assemblies of God, Baptist, Catholic, Episcopal, Lutheran, Methodist, Nazarene, Presbyterian and independent, nondenominational churches in a brief filed April 9.

ADF lawyers claim the lower court’s decision “turns upon one critical assumption — that every tax exemption is a government subsidy,” and challenge the idea on numerous grounds.

All the briefs respond to a surprise ruling in November 2013 by a federal judge in Wisconsin that a section of the tax code granting a benefit for “ministers of the gospel” not available to everyone else favors religion over non-religion, thus creating an establishment of religion prohibited by the First Amendment of the U.S. Constitution.

The case is currently on appeal before the Seventh Circuit U.S. Court of Appeals in Chicago. It started in September 2011 with a lawsuit by the Freedom from Religion Foundation, a group based in Madison, Wis., advocating for “freethinkers” such as atheists, agnostics and skeptics since 1978.

The lawsuit claims the housing allowance shows favoritism by the government for religion over and against unbelief. The Obama administration says the group has no standing in the case because it doesn’t seek the benefit for itself but only wants to withhold it from others.

FFRF leaders claim the parsonage allowance, passed in 1954, is a holdover from Cold War-era politics denouncing “godless” Communism as a threat to the American way of life. The Beckett Fund brief on behalf of Muslim, Southern Baptist, Eastern Orthodox and Hindu religious groups, however, says the intent is to ensure equal treatment for ministers and non-ministers under a “convenience of the employer” doctrine first recognized by administrative rulings in 1914.

The doctrine applies to people like hotel managers who must live on premises, military officers who must live in the barracks or commercial fishermen who must live on a ship. In those cases the employer pays the cost of an employee’s housing, but the IRS does not consider it income.

“Since its inception, the federal income tax system has recognized that some housing costs are incurred primarily for ‘the convenience of the employer’ — not for the employee’s personal consumption — and are therefore not income,” the brief argues.

“The convenience of the employer doctrine flows from a very basic principle about the nature of income,” the brief continues. “Namely, for something to qualify as income, there must be an economic gain, and this gain must primarily benefit the taxpayer personally.”

The brief explains that any number of things might benefit both a worker and the employer, such as meals, travel, entertainment and office furnishings, but if they are primarily intended to further the business rather than compensate the employee, they are not treated as income.

Over the years Congress has carved out a number of specific exemptions for Americans living overseas, government workers and anyone required to be away from home or business for an extended time.

Becket Fund lawyers say ministers fit comfortably within the “convenience of the employer” doctrine. They are typically required to live at or near the church to be close to those they serve. They are expected to be available at all hours of the day and night.

Ministers are expected to use their homes for various church events like Bible studies, meetings, meals for new members and providing temporary lodging for guest speakers and missionaries. The comfort and privacy of a home sometimes is better than a formal office for things like crisis counseling with church members or sensitive staff meetings.

Many congregants also expect the minister’s home to be accessible for unplanned social visits. Sermons are often prepared in the home. In many small churches, the minister is the primary caretaker of the church building.

“The majority of Southern Baptist congregations are small, with very limited financial resources,” the SBC Ethics and Religious Liberty Commission argues in a portion of the brief. “As a result, most are unable to afford a parsonage and rely heavily on the parsonage allowance to ensure that ministers have the housing needed for their job.”

The International Mission Board says it relies on the ability to assign housing locations to its missionaries in a way that furthers its Christian ministry, “or, in secular terms, in a way that is for the convenience of IMB.”

“The starting base salary of a missionary is a little over $20,000 and the average base salary of an IMB missionary family is about $40,000,” the IMB argues. With approximately 5,000 commissioned missionaries serving in 150 countries around the world, it continues, “loss of the clergy housing allowance would have a devastating financial impact” on the IMB.

]]>Recent friend-of-the-court briefs dispute a judge’s ruling that the IRS ministerial housing allowance violates the separation of church and state.

By Bob Allen

Christians, Jews, Muslims and Hindus may have different ideas about God, but they all agree on a tax break for clergy under attack by an atheist group that says it discriminates against the non-religious.

Interests diverse as conservative evangelicals, mainline Protestants and one group broad enough to embrace both the Southern Baptist Convention and The International Society for Krishna Consciousness filed legal briefs in recent days asking an appeals court to reverse a lower-court decision last year ending a 60-year-old “parsonage allowance” that allows churches to provide ministers with tax-exempt housing allowances in lieu of housing them in parsonages on church property.

The Becket Fund for Religious Liberty filed a brief April 8 representing Muslim, Eastern Orthodox and Hindu religious groups — as well as the SBC’s Ethics and Religious Liberty Commission and International Mission Board.

The brief says the groups disagree “profoundly on matters of theology, but are united by their deep concerns” about the “direct, immediate and harmful financial effect” on faith groups that rely on the parsonage allowance to provide housing to their ministers.

The Church Alliance, a coalition of the chief executive officers of more than 30 denominational benefit programs, weighed in April 9 with a brief arguing that the tax break passes constitutional muster because it has a secular purpose and its primary effect is neither to advance nor inhibit religion.

“The United States Supreme Court has long distinguished between affirmative assistance to religious organizations and merely lifting government‐imposed burdens so as to allow those organizations to exercise their religious mission more freely,” claimed groups including the American Baptist Churches in the U.S.A., Board of Retirement and Insurance of the National Association of Free Will Baptists and Converge Worldwide, formerly the Baptist General Conference.

“When Congress chooses not to impose a burden on religious organizations — whether by means of tax exemption or regulatory exception — it honors, rather than transgresses, this nation’s long tradition of separation between church and state.”

Alliance Defending Freedom, founded in 1994 by conservative evangelicals including James Dobson, D. James Kennedy and Bill Bright, represents 624 pastors and churches from denominational backgrounds including Assemblies of God, Baptist, Catholic, Episcopal, Lutheran, Methodist, Nazarene, Presbyterian and independent, nondenominational churches in a brief filed April 9.

ADF lawyers claim the lower court’s decision “turns upon one critical assumption — that every tax exemption is a government subsidy,” and challenge the idea on numerous grounds.

All the briefs respond to a surprise ruling in November 2013 by a federal judge in Wisconsin that a section of the tax code granting a benefit for “ministers of the gospel” not available to everyone else favors religion over non-religion, thus creating an establishment of religion prohibited by the First Amendment of the U.S. Constitution.

The case is currently on appeal before the Seventh Circuit U.S. Court of Appeals in Chicago. It started in September 2011 with a lawsuit by the Freedom from Religion Foundation, a group based in Madison, Wis., advocating for “freethinkers” such as atheists, agnostics and skeptics since 1978.

The lawsuit claims the housing allowance shows favoritism by the government for religion over and against unbelief. The Obama administration says the group has no standing in the case because it doesn’t seek the benefit for itself but only wants to withhold it from others.

FFRF leaders claim the parsonage allowance, passed in 1954, is a holdover from Cold War-era politics denouncing “godless” Communism as a threat to the American way of life. The Beckett Fund brief on behalf of Muslim, Southern Baptist, Eastern Orthodox and Hindu religious groups, however, says the intent is to ensure equal treatment for ministers and non-ministers under a “convenience of the employer” doctrine first recognized by administrative rulings in 1914.

The doctrine applies to people like hotel managers who must live on premises, military officers who must live in the barracks or commercial fishermen who must live on a ship. In those cases the employer pays the cost of an employee’s housing, but the IRS does not consider it income.

“Since its inception, the federal income tax system has recognized that some housing costs are incurred primarily for ‘the convenience of the employer’ — not for the employee’s personal consumption — and are therefore not income,” the brief argues.

“The convenience of the employer doctrine flows from a very basic principle about the nature of income,” the brief continues. “Namely, for something to qualify as income, there must be an economic gain, and this gain must primarily benefit the taxpayer personally.”

The brief explains that any number of things might benefit both a worker and the employer, such as meals, travel, entertainment and office furnishings, but if they are primarily intended to further the business rather than compensate the employee, they are not treated as income.

Over the years Congress has carved out a number of specific exemptions for Americans living overseas, government workers and anyone required to be away from home or business for an extended time.

Becket Fund lawyers say ministers fit comfortably within the “convenience of the employer” doctrine. They are typically required to live at or near the church to be close to those they serve. They are expected to be available at all hours of the day and night.

Ministers are expected to use their homes for various church events like Bible studies, meetings, meals for new members and providing temporary lodging for guest speakers and missionaries. The comfort and privacy of a home sometimes is better than a formal office for things like crisis counseling with church members or sensitive staff meetings.

Many congregants also expect the minister’s home to be accessible for unplanned social visits. Sermons are often prepared in the home. In many small churches, the minister is the primary caretaker of the church building.

“The majority of Southern Baptist congregations are small, with very limited financial resources,” the SBC Ethics and Religious Liberty Commission argues in a portion of the brief. “As a result, most are unable to afford a parsonage and rely heavily on the parsonage allowance to ensure that ministers have the housing needed for their job.”

The International Mission Board says it relies on the ability to assign housing locations to its missionaries in a way that furthers its Christian ministry, “or, in secular terms, in a way that is for the convenience of IMB.”

“The starting base salary of a missionary is a little over $20,000 and the average base salary of an IMB missionary family is about $40,000,” the IMB argues. With approximately 5,000 commissioned missionaries serving in 150 countries around the world, it continues, “loss of the clergy housing allowance would have a devastating financial impact” on the IMB.

The Justice Department will appeal a federal court ruling last fall that allowing clergy to avoid paying taxes on a part of their income designated as a housing allowance violates the constitutionally mandated separation of church and state.

The department filed a notice of appeal with the Seventh Circuit Court of Appeals in Chicago Jan. 24, just days before the Jan. 27 deadline. It’s not yet clear what arguments government attorneys will make in defending the law.

Last November, Senior United States District Judge Barbara Crabb said a section of the tax code granting a benefit for “ministers of the gospel” not available to everyone else favors religion over non-religion, thus creating an establishment of religion prohibited by the First Amendment of the U.S. Constitution.

But Crabb, whose jurisdiction is in Wisconsin, stayed her decision pending appeals, leaving the law intact in that state.

If the Seventh Circuit affirms Crabb’s ruling, it would affect only Wisconsin, Illinois and Indiana, but might prompt the Internal Revenue Service to apply the ruling nationally to ensure consistent tax treatment of ministers.

If the appellate court overturns the ruling, the Freedom From Religion Foundation, which filed the suit, could appeal to the Supreme Court.

]]>Government attorneys will appeal a ruling striking down a widely used tax benefit extended to clergy.

By Robert Dilday

The Justice Department will appeal a federal court ruling last fall that allowing clergy to avoid paying taxes on a part of their income designated as a housing allowance violates the constitutionally mandated separation of church and state.

The department filed a notice of appeal with the Seventh Circuit Court of Appeals in Chicago Jan. 24, just days before the Jan. 27 deadline. It’s not yet clear what arguments government attorneys will make in defending the law.

Last November, Senior United States District Judge Barbara Crabb said a section of the tax code granting a benefit for “ministers of the gospel” not available to everyone else favors religion over non-religion, thus creating an establishment of religion prohibited by the First Amendment of the U.S. Constitution.

But Crabb, whose jurisdiction is in Wisconsin, stayed her decision pending appeals, leaving the law intact in that state.

If the Seventh Circuit affirms Crabb’s ruling, it would affect only Wisconsin, Illinois and Indiana, but might prompt the Internal Revenue Service to apply the ruling nationally to ensure consistent tax treatment of ministers.

If the appellate court overturns the ruling, the Freedom From Religion Foundation, which filed the suit, could appeal to the Supreme Court.

]]>Robert DildayPoliticsMon, 27 Jan 2014 12:53:36 -0500Court strikes down clergy tax breakhttp://baptistnews.com/culture/politics/item/9044-court-strikes-down-clergy-housing-allowance
http://baptistnews.com/culture/politics/item/9044-court-strikes-down-clergy-housing-allowanceThe ruling, which does not take effect until all appeals are final, would remove what GuideStone calls “the most important tax benefit available to ministers.”

Editor's note: This story was edited after posting to correct an error in the final paragraph.

By Bob Allen

A federal judge said Nov. 23 that an IRS rule allowing clergy to avoid paying taxes on a part of their income designated as a housing allowance violates the constitutionally mandated separation of church and state.

Senior United States District Judge Barbara Crabb said a section of the tax code granting a benefit for “ministers of the gospel” not available to everyone else favors religion over non-religion, thus creating an establishment of religion prohibited by the First Amendment of the U.S. Constitution.

Crabb, appointed by President Jimmy Carter to the U.S. District Court for Western Wisconsin, ordered her ruling to take effect after the conclusion of any appeal. That means what GuideStone Financial Resources calls “the most important tax benefit available to ministers” is safe for now.

Leaders at GuideStone, the Southern Baptist Convention agency that offers retirement, insurance, investment management and other financial services to the Southern Baptist and wider evangelical Christian communities, plan to join others in a legal brief supporting the ministerial housing allowance when the case goes to appeal.

“Although this particular case does not have immediate impact, we know that pastors and others in ministry are facing challenges in our very own nation as never before,” GuideStone President O.S. Hawkins said in a statement.

“This decision, while not unanticipated, is sadly symptomatic of our culture today,” Hawkins said. “We count it a privilege to be an advocate for those who have given their lives to ministry, and we will not forsake our mission to undergird those who so faithfully serve our churches and ministries.”

GuideStone is currently suing the federal government, claiming the Affordable Care Act requirement that employers include birth control in employee insurance coverage violates the religious liberty of faith-based employers who believe emergency contraception is immoral.

Russell Moore, president of the SBC Ethics and Religious Liberty Commission, stood beside Hawkins in statements posted on the ERLC website.

“The clergy housing allowance isn’t a government establishment of religion, but just the reverse,” Moore said. “The allowance is neutral to all religions. Without it, clergy in small congregations of all sorts would be penalized and harmed.”

The so-called “parsonage allowance” dates back to 1921, when most churches maintained a parsonage near the church where the minister and his family lived rent-free. The IRS allowed ministers to exclude such in-kind compensation from federal taxes.

In 1954, Congress extended the law to cash allowances, as more and more ministers were moving out of parsonages to rent or purchase their own homes.

Over the years challenges have arisen, including a high-profile case in 1996 when Purpose Driven Life author and Southern Baptist mega church pastor Rick Warren deducted his entire $77,663 salary from Saddleback Church in Lake Forest, Calif., as housing allowance. The IRS ordered Warren to pay back taxes on a portion of his income.

Warren spent four years in court defending his housing deduction and won in 2000, when a court struck down the IRS argument capping the deduction at a “reasonable” amount and accepted Warren’s argument that the amount could be unlimited.

The IRS filed an appeal, but before it made it to a three-judge panel, Congress swiftly passed the 2002 Clergy Housing Allowance Clarification Act to protect the parish exemption but limit it to the fair market rental value of a home.

Several challenges to the benefit have failed due to the legal loophole of “standing.” Courts have ruled that non-ministers suing for a benefit available only to clergy cannot possibly prevail, and the only result would be to deny it to those who qualify.

The current case, filed in September 2011 by the Freedom From Religion Foundation, cleared that hurdle by designating a portion of employee compensation as a housing allowance. Two employees in turn sued the federal government, claiming that denying them a benefit available to ministers violates the Establishment Clause and gives the IRS and Treasury Department authority to make “sensitive, fact-intensive and subjective determinations” on religious matters such as whether an individual is “duly ordained.”

FFRF officials pointed out that when the law was enacted in 1954, America was in the throes of the Cold War and gripped by fear of Communism. The congressman who proposed the ministerial exemption, Illinois Democrat Peter Mack, who died in 1986, declared:

“Certainly, in these times when we are being threatened by a godless and anti-religious world movement we should correct this discrimination against certain ministers of the gospel who are carrying on such a courageous fight against this foe. Certainly this is not too much to do for these people who are caring for our spiritual welfare.”

The IRS has interpreted the exemption broadly, taking “ministers of the gospel” to mean not only those who preach from the New Testament, but also applying to thousands of ministers, priests, rabbis, imams and other faith leaders.

In her 43-page ruling, however, Judge Crabb said because a minister’s primary function “is to disseminate a religious message, a tax exemption provided only to ministers results in preferential treatment for religious messages over secular ones.”

“Some might view a rule against preferential treatment as exhibiting hostility toward religion, but equality should never be mistaken for hostility,” Crabb opined. “It is important to remember that the Establishment Clause protects the religious and nonreligious alike.”

Crabb said if members of Congress believe there are “important secular reasons” for granting the exemption, they can rewrite the law in a way that includes ministers as part of a larger group of beneficiaries, but as currently written the tax code “is unconstitutional.”

“This decision agrees with us that Congress may not reward ministers for fighting a ‘godless and anti-religious’ movement by letting them pay less income tax,” Gaylor and Barker said in a joint statement. “The rest of us should not pay more because clergy pay less.”

“The ministerial housing allowance does not violate the First Amendment’s Establishment Clause,” Walker said in a statement. “Government violates the Establishment Clause when it gives religion a tangible benefit, such as grants to churches to finance their ministries or vouchers to parochial schools to pay for the teaching of religion. However, accommodations of religion, such as tax exemption and other exclusions, are generally permitted.”

Walker says the Free Exercise Clause of the First Amendment does not require such accommodation but the Establishment Clause does not forbid it. While Section 107 of the tax code applies specifically to clergy, he said, other sections give similar relief to other segments of society including members of the military, taxpayers living abroad and employees required to live on premises or who are on 24-hour call.

]]>The ruling, which does not take effect until all appeals are final, would remove what GuideStone calls “the most important tax benefit available to ministers.”

Editor's note: This story was edited after posting to correct an error in the final paragraph.

By Bob Allen

A federal judge said Nov. 23 that an IRS rule allowing clergy to avoid paying taxes on a part of their income designated as a housing allowance violates the constitutionally mandated separation of church and state.

Senior United States District Judge Barbara Crabb said a section of the tax code granting a benefit for “ministers of the gospel” not available to everyone else favors religion over non-religion, thus creating an establishment of religion prohibited by the First Amendment of the U.S. Constitution.

Crabb, appointed by President Jimmy Carter to the U.S. District Court for Western Wisconsin, ordered her ruling to take effect after the conclusion of any appeal. That means what GuideStone Financial Resources calls “the most important tax benefit available to ministers” is safe for now.

Leaders at GuideStone, the Southern Baptist Convention agency that offers retirement, insurance, investment management and other financial services to the Southern Baptist and wider evangelical Christian communities, plan to join others in a legal brief supporting the ministerial housing allowance when the case goes to appeal.

“Although this particular case does not have immediate impact, we know that pastors and others in ministry are facing challenges in our very own nation as never before,” GuideStone President O.S. Hawkins said in a statement.

“This decision, while not unanticipated, is sadly symptomatic of our culture today,” Hawkins said. “We count it a privilege to be an advocate for those who have given their lives to ministry, and we will not forsake our mission to undergird those who so faithfully serve our churches and ministries.”

GuideStone is currently suing the federal government, claiming the Affordable Care Act requirement that employers include birth control in employee insurance coverage violates the religious liberty of faith-based employers who believe emergency contraception is immoral.

Russell Moore, president of the SBC Ethics and Religious Liberty Commission, stood beside Hawkins in statements posted on the ERLC website.

“The clergy housing allowance isn’t a government establishment of religion, but just the reverse,” Moore said. “The allowance is neutral to all religions. Without it, clergy in small congregations of all sorts would be penalized and harmed.”

The so-called “parsonage allowance” dates back to 1921, when most churches maintained a parsonage near the church where the minister and his family lived rent-free. The IRS allowed ministers to exclude such in-kind compensation from federal taxes.

In 1954, Congress extended the law to cash allowances, as more and more ministers were moving out of parsonages to rent or purchase their own homes.

Over the years challenges have arisen, including a high-profile case in 1996 when Purpose Driven Life author and Southern Baptist mega church pastor Rick Warren deducted his entire $77,663 salary from Saddleback Church in Lake Forest, Calif., as housing allowance. The IRS ordered Warren to pay back taxes on a portion of his income.

Warren spent four years in court defending his housing deduction and won in 2000, when a court struck down the IRS argument capping the deduction at a “reasonable” amount and accepted Warren’s argument that the amount could be unlimited.

The IRS filed an appeal, but before it made it to a three-judge panel, Congress swiftly passed the 2002 Clergy Housing Allowance Clarification Act to protect the parish exemption but limit it to the fair market rental value of a home.

Several challenges to the benefit have failed due to the legal loophole of “standing.” Courts have ruled that non-ministers suing for a benefit available only to clergy cannot possibly prevail, and the only result would be to deny it to those who qualify.

The current case, filed in September 2011 by the Freedom From Religion Foundation, cleared that hurdle by designating a portion of employee compensation as a housing allowance. Two employees in turn sued the federal government, claiming that denying them a benefit available to ministers violates the Establishment Clause and gives the IRS and Treasury Department authority to make “sensitive, fact-intensive and subjective determinations” on religious matters such as whether an individual is “duly ordained.”

FFRF officials pointed out that when the law was enacted in 1954, America was in the throes of the Cold War and gripped by fear of Communism. The congressman who proposed the ministerial exemption, Illinois Democrat Peter Mack, who died in 1986, declared:

“Certainly, in these times when we are being threatened by a godless and anti-religious world movement we should correct this discrimination against certain ministers of the gospel who are carrying on such a courageous fight against this foe. Certainly this is not too much to do for these people who are caring for our spiritual welfare.”

The IRS has interpreted the exemption broadly, taking “ministers of the gospel” to mean not only those who preach from the New Testament, but also applying to thousands of ministers, priests, rabbis, imams and other faith leaders.

In her 43-page ruling, however, Judge Crabb said because a minister’s primary function “is to disseminate a religious message, a tax exemption provided only to ministers results in preferential treatment for religious messages over secular ones.”

“Some might view a rule against preferential treatment as exhibiting hostility toward religion, but equality should never be mistaken for hostility,” Crabb opined. “It is important to remember that the Establishment Clause protects the religious and nonreligious alike.”

Crabb said if members of Congress believe there are “important secular reasons” for granting the exemption, they can rewrite the law in a way that includes ministers as part of a larger group of beneficiaries, but as currently written the tax code “is unconstitutional.”

“This decision agrees with us that Congress may not reward ministers for fighting a ‘godless and anti-religious’ movement by letting them pay less income tax,” Gaylor and Barker said in a joint statement. “The rest of us should not pay more because clergy pay less.”

“The ministerial housing allowance does not violate the First Amendment’s Establishment Clause,” Walker said in a statement. “Government violates the Establishment Clause when it gives religion a tangible benefit, such as grants to churches to finance their ministries or vouchers to parochial schools to pay for the teaching of religion. However, accommodations of religion, such as tax exemption and other exclusions, are generally permitted.”

Walker says the Free Exercise Clause of the First Amendment does not require such accommodation but the Establishment Clause does not forbid it. While Section 107 of the tax code applies specifically to clergy, he said, other sections give similar relief to other segments of society including members of the military, taxpayers living abroad and employees required to live on premises or who are on 24-hour call.